The Bombay Stock Exchange (BSE) Sensitive Index (Sensex) closed its shares Thursday with a remarkable upturn while government banks performed big on bourses. The period of good fortune is expected to stay with the perceived delay in the unrolling of incentives at the U.S stock market.
Strong foreign purchases
Blue chips recovered strongly from strong foreign purchases compared to the Sensex’ low performance two months back when the rupee dipped so low threatening to create a crisis in the BSE market. A total inflow of $3.5 billion in foreign buying stirred the Sensex to a high closing Thursday. This recent surge in rupee performance has been backed up by the unforeseen deferral of Federal Reserve financial stimulus.
Slow growth
The slow growth of Bombay economy has dismayed many investors but surprisingly this did not deter foreign buyers from taking the risk of putting their money on Sensex. A record low of 68.85 struck a blow on the rupee during the latter part of August, creating major concern on the currency status of the country. But on Friday’s wake, the Sensex went up to as high as 21,293.88 points marking a 0.6 % gain during the 24-hour period and ending at 0.2 %, overtaking the local market’s January 10, 2008 record of 21,206.77.
Shaky stand
Financial analysts look at the present stand of the BSE Sensex as without strong legs. Angel Broking fund manager Phani Sekhar said he was pleased with the way things went last week with the upped value of Bombay stocks but he said there is a noticeable weakness in the purchases. He also observed that what supported the new high were just a few expensive stocks. The current rush is thereby causing people to stock up on shares and if liquidity continues and the basics fail to move forward, the current Sensex high may not last long.
Poor showing
Although Sensex has acquired a lofty slot in the current buying, records show it is still fourth in rank among nations with poor showing. Thomson Reuters tracking system noted a fall of 2.6% in Sensex’s dollar exchange operation. This resulted to the weakening of the rupee that hit a record low of 68.85 two months ago. The previous concerns on the continued fall of the rupee temporarily calmed down due to the slackening in U.S. markets and the course of action undertaken by the new governor of the central bank of India, Raghuram Rajan.
Continuing challenges
The sudden rise in the BSE Sensex closing Thursday does not guarantee economic stability as stakeholders are warned of persisting challenges in the value of the rupee. Problems in the manufacturing side went on its third month of trimming down in October. The improving Bombay currency is shown in other information such as its improvement in the infrastructure department. However this is not enough to sustain the strength of the economy as analysts see more downturns in the future when the central bank increases its interest rates to address high inflation issues.
World Bank forecast
In October the World Bank cut the predicted growth for the third-largest economy in Asia to 4.7% in March. This is under the 5% low showing that prevailed in the past 10 years. Meanwhile the Reserve Bank of India, marking its second consecutive month of fighting inflation last month, issued a 25% increase in interest rates.
Photo Credit: Bombay Stock Exchange Logo
Facebook
Twitter
Pinterest
Google+
LinkedIn
Email